We have been doing a lot of work on the Internet of Things (IoT) lately across a number of engagements. And in all of these, a common thread that emerges is just how hard and jagged the IoT market is. As one friend of D2D puts it, “There is no such thing as IoT”, it is not one market, but 10 or 20 (or more) separate fields. So while we can talk about “computing” or “smartphones” and refer to products that are common across all industries, for IoT we really need to break up the topic into dozens of conversations. Put simply IoT is a mess.
Does this mean we should give up? No, it just means everyone needs to be realistic about the subject. Let’s first look at the problem, and then think about ways to build an IoT business that actually works.
The biggest problem with “IoT” is that it means different things to different people. For Consumer Electronics and Internet companies, IoT is really what we used to call Home Networking – devices scattered around the home, connected to a WiFi network. For an Oil and Gas company, it means collecting data from thousands of different sensors scattered over hundreds of miles in remote fields or along pipelines. The shipping industry alone has a dozen different IoT use cases – remote temperature sensors, tracking shipping pallets, driver mileage calculations. There is an infinite array of these use cases. Each has some small value-add, and aggregated together it holds an immense amount of value. So part of the problem is that everyone likes to talk about the ‘immense’ amount without mucking about with the details.
From a hardware perspective the appeal of a single unified market is that it means simplification and economies of scale. However, the reality is that this is not just possible.
Once you start building an IoT product this becomes apparent immediately. IoT networks need two things, they need a network for communications, and then modules, attached to ‘things’, that communicates to those networks. But compare that to all the use cases possible. That Oil company above needs a long range network, cellular will not work because of the remote locations involved. The module can probably have power, but needs someone to go out and install them. By contrast, the cellular might work for a local delivery fleet, but then everyone fleet will need different sensors built into the module (e.g. temperature, location, activity, camera, whatever). Then remember that none of these companies actually build their own modules for anything, so they have to find someone capable of that. For those of in the technology business, the idea of finding a manufacturer in Asia to build a module is not too remote, for everyone else it is literally the other side of the world. Further complicating all this is the fact that there is no company on the planet capable of providing all the electronics needed – including four or five different flavors of radios and a dozen categories of sensors. The combinatorics behind this are one of those math problems with more answers than there are atoms in the universe.
Compounding this problem is that IoT really cuts across the impassable chasm between hardware and software. All the value in IoT (for users) comes from software – better management of tangible assets. But most of the enabling required is hardware. From our perspective, deep in the hardware trenches, most companies talking about IoT are hardware companies that have no understanding of software. They live in a world of radios, standards bodies and endless acronyms. We recently talked to one promising start-up that has a great service to sell, with incredible revenue economics, but the CEO only wanted to talk about his 2G, 3G and 4G radios. This is not just a theoretical or philosophical problem, it is a very practical one. Too often, we find hardware makers dismissing opportunities because ‘the database won’t be able to scale’. Spend your career specializing in one field and you can be forgiven for not keeping up to date on the advances that others took for granted ten years ago. Trust us, the data behind a few hundred thousand devices transmitting a few bytes a couple times a day is ‘small data’.
One would think that there are intermediaries capable of integrating some solution weaving all these threads together. There aren’t. The obvious candidates, the big consultants and systems integrators are not comfortable with hardware and accustomed to dealing in much larger-scale projects.
All of these sound impossible. It is not. Instead, we view this as opportunity. There has to be room for smart companies, start-ups, to solve these problems. (For the moment, we will set aside a discussion of the options available for raising venture funding for IoT solutions start-ups.) In the future, likely the near future, we will start to see companies that provide solutions for IoT. The smart ones will not try to solve every problem. We have spent a lot of hours recently working with companies to define their product and identify the verticals where their products fit. There is no one-size-fits-all here, but there does not need to be.
For many years, there was a perception among industry participants that somehow all of these could be served using a single ‘platform’. Most people actually working in the field have long since abandoned hope that such a thing will emerge, which is one of those things that sounds depressing but is actually liberating. Time to stop dreaming and get building.
